Correlation Between Achilles Therapeutics and Third Harmonic

Can any of the company-specific risk be diversified away by investing in both Achilles Therapeutics and Third Harmonic at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Achilles Therapeutics and Third Harmonic into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Achilles Therapeutics PLC and Third Harmonic Bio, you can compare the effects of market volatilities on Achilles Therapeutics and Third Harmonic and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Achilles Therapeutics with a short position of Third Harmonic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Achilles Therapeutics and Third Harmonic.

Diversification Opportunities for Achilles Therapeutics and Third Harmonic

0.38

Correlation Coefficient

Achilles Therapeutics  Third Harmonic

Weak diversification

The 3 months correlation between Achilles and Third is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Achilles Therapeutics PLC and Third Harmonic Bio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Third Harmonic Bio and Achilles Therapeutics is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Achilles Therapeutics PLC are associated (or correlated) with Third Harmonic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Third Harmonic Bio has no effect on the direction of Achilles Therapeutics i.e., Achilles Therapeutics and Third Harmonic go up and down completely randomly.

Pair Corralation between Achilles Therapeutics and Third Harmonic

Given the investment horizon of 90 days Achilles Therapeutics PLC is expected to generate 1.36 times more return on investment than Third Harmonic. However, Achilles Therapeutics is 1.36 times more volatile than Third Harmonic Bio. It trades about 0.08 of its potential returns per unit of risk. Third Harmonic Bio is currently generating about 0.08 per unit of risk. If you would invest  86.00  in Achilles Therapeutics PLC on June 24, 2024 and sell it today you would earn a total of  18.00  from holding Achilles Therapeutics PLC or generate 20.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Achilles Therapeutics PLC  vs.  Third Harmonic Bio

Achilles Therapeutics PLC

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Achilles Therapeutics PLC are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite weak technical indicators, Achilles Therapeutics disclosed solid returns over the last few months and may actually be approaching a breakup point.

Third Harmonic Bio

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Third Harmonic Bio are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Third Harmonic exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Achilles Therapeutics and Third Harmonic

The main advantage of trading using opposite Achilles Therapeutics and Third Harmonic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Achilles Therapeutics position performs unexpectedly, Third Harmonic can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Third Harmonic will offset losses from the drop in Third Harmonic's long position.

The idea behind Achilles Therapeutics PLC and Third Harmonic Bio pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.